Money & Budgeting

Over the last few years the jobs of accountants have become a little easier as the Taxation Office has allowed self assessing tax returns. Whilst this has meant easier and faster processing, there has also become a greater need to keep accurate records.

Taxpayers need to be able to prove how the figures on their tax return were calculated and, if necessary, provide documentation proving their case.

What this means of course is that every taxpayer needs to pay careful attention to their tax return and to maintain proper records in the event of a query from the Taxation Office. Without proper written evidence you may have your claim disallowed and end up having to pay extra tax.

Here are some pointers on keeping efficient records:

• You should keep records of any income you have received. On top of salaries and wages, this also includes interest on investments, dividends, managed funds or rental properties. If you receive income from your own company or a public trading trust, keep every statement which details payments received, including the amount of franked and unfranked dividends.

• All records should be kept for a minimum of 5 years from the date of the notice your tax assessment is sent to you.

• When it comes to expenses related to the payments you receive, make sure you have records of car expenses, travel expenses, clothing uniform and dry-cleaning costs, self education expenses and any other lot work-related expense you have claimed. Within each of these categories there are prescribed details, so check with your accountant to make sure you are keeping the correct records.

• Records can be stored in either paper or electronic format but make sure that any copies are clear and true reproductions of the original. The Taxation Office also recommends that electronic records should be backed up to ensure that the evidence is easily accessible.

• Make sure you keep records and receipts for every donation you have made to a charitable organisation. Additionally, always keep a copy of your PAYG payment summary, (previously known as a group certificate), especially if you make regular donations to charities through your pay. Also, obtain a letter from eligible organisations confirming any amounts you have contributed for special functions, for example a charity dinner

• If you are making a claim for medical expenses, you will need to keep receipts or other documents which evidence the expense. In respect of aged care facilities, you will also need to keep all documents relating to any payment made as some of these may be considered medical expenses. Contributions to a private health fund may also be deductible, so make sure you keep all statements from Medicare or your private fund.

This is certainly not an exhaustive list of the types of records you will have to keep, but it is certainly a good starting point. You should always check with your tax agent to ensure that your record-keeping reflects your particular taxation circumstances.